|A. D. Jain (JM)
|Assessment, CBDT Instructions, Scope of scrutiny
|J. S. Bhasin
|March 24, 2016 (Date of pronouncement)
|April 15, 2016 (Date of publication)
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|S. 143(3): In an AIR scrutiny assessment, the AO is not entitled to widen the scope of scrutiny without approval of the CIT as per CBDT's Instruction. Such an assessment order is not sustainable
(i) The AIR information was regarding transaction of Rs. 25 lakhs dated 31.3.2011 Para 2 of the CBDT Instruction dated 08.09.2010 states that the scrutiny of cases selected on the basis of information received through AIR returns would be limited only to the aspects of information received through AIR;
(ii) As seen, the AIR information in the present case was regarding cash deposits of Rs. 25 lakhs by the assessee in her savings bank account with OBC. Meaning thereby, that the assessee was required to explain the source of such cash deposits. The assessee explained the same as sale proceeds of her residential house amounting to Rs.32.25 lakhs received from Smt. Naunihal Kaur, the purchaser. Her this assertion was duly supported by a copy of the concerned sale deed;
(iii) Now, as per the CBDT Instruction, nothing further was to be gone into by the AO, since the information received through AIR was the cash deposits. However, the AO as noted in paras 3.1 & 3.3 of the assessment order itself asked the assessee vide letter dated 13.12.2013 to produce Smt. Balbir Kaur and Smt. Kamaljit Kaur, with whom the assessee had entered into a separate agreement to sell and from whom, the assessee had received a sum of Rs. 3 lakhs at the time of agreement “for their examination in order to ascertain whether the agreement, was finalized or cancelled”. The AO observed that this proceeding was limited to the extent of the AIR information;
(iv) Evidently, the matter of the other agreement to sell does not stand covered in the AIR information, which was regarding the cash deposits of Rs. 25 lakhs, which the assessee had adequately explained, as above. So, it was obviously not within the purview of the AO to ask the assessee to produce Smt. Balbir Kaur and Smt. Kamaljit Kaur, or to make addition of Rs. 3 lakhs, as was done;
(v) In fact, what the AO did was to widen the scrutiny. Now, para 2 of CBDT Instruction is specific when it states that where it is felt that apart from the AIR information, there is potential escapement of income more than Rs. 10 lakhs, the case may be taken up for wider scrutiny with the approval of the administrative Commissioner.
(vi) So, the proper course for the AO before making these additional enquiries would have been to take approval from the administrative Commissioner to widen the scrutiny. This, however, was not done and therefore, the action of the AO is violative of the CBDT Instruction.